Income Tax Severed Letters - 2021-11-24


2020 Ruling 2020-0838371R3 - Post-Mortem Pipeline

Unedited CRA Tags
84(2), 84.1, 245(2), 110.6(19), 83(1)

Principal Issues: 1. Does paragraph 84.1(1)(b) deem a dividend in the Proposed Transactions? 2. Does subsection 84(2) apply to the Proposed Transactions? 3. Does the GAAR apply to the Proposed Transactions?

Position: 1. Yes, but only to adjust soft ACB to hard ACB, 2. No, 3. No.

Reasons: The Proposed Transactions are in accordance with the Act, relevant jurisprudence and are consistent with our previous positions.

2020 Ruling 2020-0840631R3 F - Purpose Test in Subsection 55(2)

Unedited CRA Tags
no application of s. 55(2) because ss. 88(2)(b) and 84(2) dividends did not significantly reduce capital gains
deemed ss. 88(2)(b) and 84(2) dividends on winding-up into three Holdcos

Principal Issues: Whether the taxable dividends deemed to have been paid pursuant to subsection 88(2) are subject to subsection 55(2).

Position: No.

Reasons: None of the purposes of the payment or receipt of the taxable dividends is to effect a significant reduction in the portion of the capital gain that, but for the dividend, would have been realized on a disposition at FMV of any shares of the capital stock of Opco.